Subject The influence of the banking sector on the public welfare is indisputable; however, the channels of influence significantly differ in developed and developing countries. The article addresses the impact of the banking sector on the socio-economic development of countries with different types of economies. Objectives The aim is to analyze and assess the influence of the banking sector on the social and economic development of countries worldwide through revealing the channels of influence by selected groups of countries. Methods The methodological framework consists of the general scientific methods of dialectics, analysis, synthesis, induction, deduction and analogy. The study also employs a combination of methods of economic, statistical and econometric analyses. Results We explored how the banking sector's indicators influence the social and economic development of States, performed an econometric analysis of the impact of the banking sector on GDP per capita and Human Development Index in the selected group of countries. The econometric analysis showed that institutional and functional indicators of the banking system have the greatest impact on countries' social and economic development. Conclusions and Relevance Building a banking infrastructure and increasing the range and volume of banking services and operations have a more significant impact on emerging economies. The formation of a reliable and stable banking system in developing countries, based on the experience of more developed countries can help overcome wealth disparity and raise the living standards of the population.
Keywords: banking, economic growth, socio-economic development
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